Another major US bank pledges ten figures to fight racial inequality.
On Wednesday, Citigroup, the country’s fourth-largest bank in terms of asset size, pledged more than $ 1 billion over the next three years to close the growing racial wealth gap and increase the economic mobility of black Americans.
“The pandemic is a health crisis with serious economic implications and it has led to an exposure of the systemic racism that has existed in this country for far too long,” said Citi CFO Mark Mason, who is part of a campaign. small group of prominent black leaders on Wall Street.
Citi’s announcement follows on from Bank of America’s in June, by promising $ 1 billion advance racial equality and economic opportunity over a four-year period.
The coronavirus pandemic and the ensuing protests against the murders of blacks have shone the spotlight on existing racial disparities in the United States, putting them at the forefront of business consciousness.
“It’s been a catalyst for a lot of companies to really try to solve this problem in a substantive way, and for Citi, it’s definitely put us in a step back,” Mason says.
“The murders of George Floyd in Minnesota, Ahmaud Arbery in Georgia and Breonna Taylor in Kentucky are a reminder of the dangers black Americans like me face in their daily lives. ”
Following Floyd’s brutal murder in May, Mason wrote a frank book and poignant letter on the bank’s corporate blog, in which he detailed Floyd’s last minutes of life and acknowledged that the latest deaths of black citizens in custody were “reminders of the dangers black Americans like me face in their daily life “.
The letter was widely circulated among business leaders, including the Outgoing CEO Michael Corbat, who encouraged employees in an internal memo to do their part to create a “truly equal and just society”.
As protesters gathered across the country, rekindling a national conversation about race, Corbat challenged his executive reports to design a strategic initiative that would tackle key drivers of economic racial injustice and have a significant impact. on the black community.
These leaders quickly assembled a team of business leaders from across the company to design what would later form Citi’s $ 1 billion pledge to help advance racial equity and ease the financial burden it caused. black people suffer in the United States.
The funds will be used to expand access to banking and credit services in communities of color, invest more in black-owned businesses, promote the growth of black homeownership and strengthen policies. and Citi’s anti-racist practices.
Almost half of the investment over three years will go to boosting homeownership for people of color, which has always been a key driver of wealth creation in the United States, and supporting affordable housing and labor projects by minority developers. Just under $ 400 million will go to sourcing opportunities for black-owned commercial suppliers, while $ 50 million will go to additional impact investments for black entrepreneurs.
Citi is allocating $ 100 million to support the growth and income generation of minority deposit-taking institutions, which play a critical role in promoting the economic viability of the communities they serve, by providing them with $ 50 million in capital. growth. The bank’s philanthropic arm, Citi Foundation, will receive the remaining $ 100 million to provide economic opportunities for young people in underserved communities.
Citi is also reviewing some of its own long-standing policies. The bank says it will develop standards for designing inclusive software that eliminate bias, expand Citi’s capital market business with minority-owned brokers, and increase representation of people of color on Citi accounts and in the world. within their management teams.
Mason says that removing the underlying and often deeply ingrained biases from a business requires careful investigation and deep soul-searching. “Only when you carefully examine these elements – the existing selection processes, the age-old criteria that were designed – and are challenged to see who they inadvertently omit or exclude, that you can then change them.” in a way that helps remove these barriers.
The bank’s financial commitment follows a new Citi-sanctioned report that puts a number behind the economic cost of black inequality in the United States Published Monday, the analysis found that nearly $ 5,000 billion could be added to U.S. GDP over the next five years if four key racial gaps for blacks – wages, education, housing, and investment – were closed today, a 0.4 percent annual increase in U.S. GDP growth. Closing these key racial gaps 20 years ago could have generated $ 16 trillion for the US economy, according to the report.
“Tackling racism and closing the racial wealth gap is the most critical challenge we face in creating a just and inclusive society,” said Corbat, CEO of Citi, in a press release announcing the commitment of the bank. “We bring together all the capacities of our institution. . . like never before to combat the impact of racism on our economy.
Citi will establish a board of senior executives from across the company to assess its performance and hold companies accountable for the bank’s commitment to racial equity.